The rise of the British ghost town

Butchers, bakers, post offices and newsagents are closing in their dozens, leaving dead communities

Apart from the basics - bread, milk, sweets and newspapers - the shop run by Josephine in the middle of a south London council estate sold a mystery ingredient. Whatever time of day you turned up at her tiny premises, all sorts of people - retired, out of work, single parents - would be there, exchanging gossip and asking after neighbours. Her shopfront created another job, for the local window cleaner, and she employed several paper boys. Any vandalism and bullying in the surrounding streets was confronted by Josephine head on. Her secret product line, in other words, was the glue that holds communities together. When she had to close once due to illness, I saw her elderly customers wandering about lost in the big supermarket nearby. One old regular tried and failed to engage a stressed checkout worker in conversation, before sadly trailing away.

But Josephine's shop is now closed for good, beaten by the big multiple retailers. The same story could be told in dozens of other communities up and down the country. Between 1997 and 2002, specialised stores, including butchers, bakers, fishmongers and newsagents, closed at the rate of 50 a week. Over the same five-year period, VAT registrations for small-scale food manufacturers fell by almost 12 per cent. Under the supermarkets' influence, a new retail feudalism is emerging. Wholesalers, which form the retail infrastructure vital for underpinning local stores, have closed at the rate of six a week over the past two years, largely as a consequence of being sidelined by the big supermarkets.

The problem goes down literally to the roots of the economy and to how we feed ourselves. Between 1997 and 2002, the number of UK farmworkers fell by 100,000, to 580,000, with the result that many rural homes were taken over by city commuters who have much weaker links to the local community, and who are less likely to spend their money locally. The number of abattoirs has also fallen dramatically, from 1,022 in 1985 to just 387 in 2000, while the number of apple orchards in the UK halved between 1990 and 2002.

Britain's local economies are being hollowed out like fruit being eaten from within by a maggot. A whole retail ecosystem is collapsing. We are turning Britain into a country of ghost towns.

Banking services are essential for keeping local economies afloat. But by the end of 2002, Britain had lost one-third of its bank branch network in a decade. Post offices, too, are vital. Yet in spite of government intervention and a commitment to keep them open in areas of high deprivation, branch closures increased in the year to March 2003 to a total of 345. In both rural and urban areas, the post office branch network continues to shrink. The problem is particularly acute in rural areas, where more than two-thirds of customers use the local post office as a centre for information-gathering, social interaction and general services.

According to the Campaign for Real Ale, 20 traditional pubs close across Britain every month. Community pharmacies, too, are threatened under deregulation - proposed by the oddly named Office of Fair Trading - that would allow supermarkets to take over their business.

The New Economics Foundation highlighted these trends in a report published a year ago and which was also the subject of an article in the New Statesman's Christmas issue of 2002. Those trends have continued and now even more evidence has emerged to show how we are undermining our local quality of life and creating more and more ghost towns.

In May 2002, a government task force pointed out that "the condition of parks and green spaces can make or break plans to regenerate neighbourhoods and improve townscapes, create a sense of place and build community". Yet, since 1989, London alone has lost green space equivalent in size to 1,428 football pitches, or more than seven Hyde Parks.

We have simply stopped bothering about our open spaces. In the mid-1970s, urban councils spent a quarter of their budgets on them; in 2001, they spent just 8.3 per cent. According to English Heritage, 40 per cent of urban parks are in decline, while a government task force found just 18 per cent to be in good condition.

At the end of 2002, school playing fields were being sold off at the rate of nearly one a week, despite Labour's assurances that it would reverse the policies of the previous Conservative government. Between 1998 and 2002, regardless of all the concerns over child obesity, planning permission was granted for the sale of 195 playing fields.

A final keystone holding up the arch of community are places where people can meet and hold functions. Here, too, the prospect is dismal. In England, there has been a dramatic decline in local authority funding for the upkeep and maintenance of community buildings such as village halls. Funding remained frozen at £5m a year (that is, with no uplift for inflation) for the two decades up to 2000. Astonishingly, the government admitted this year that nobody knows how many community buildings there are, or if the numbers are rising or falling from year to year.

So what can be done? Government policy coherence would be a start. Large amounts of money are being pumped into local regeneration - yet, at the same time, other policies (or, more often, the absence of policy) encourage economic forces that wreck local economies. For example, competition policy, weak enough nationally, is non-existent at local level, so that the big super-markets can build near-total local food retail monopolies and suffocate smaller businesses.

The sudden growth of "fake local" stores under the big supermarket brands presents yet another threat to small independent stores. For example, Tesco Express stores have reportedly caused drops in business of 30-40 per cent for other local shops.

We are thus faced with the prospect of a commercial one-party state. The supermarkets urgently need regulation. Voluntary approaches have failed. The big four supermarkets agreed to a code of conduct to govern their relationships with suppliers, whose margins are constantly being forced down by the hard-bargaining multiples. But the complaints procedure has never been used; suppliers fear that if they report breaches, they will be "de-listed".

Perversely, some neighbourhood renewal strategies that were supposed to rebuild town centres have driven out small local shops and replaced them with national-chain retailers that, more like vacuum cleaners sucking wealth out than effective irrigation channels, generally return less consumer spending pound for pound to the local economy than community-rooted businesses.

Perhaps the best hope of salvation comes from refugees, asylum-seekers and immigrants - now the subject of so much hysteria. Immigrant communities are an enormous counterforce to the growth of ghost towns. They make a disproportionately positive contribution to the fabric of our local economies. New arrivals are highly motivated and, where allowed, pass on the benefits of their economic activity, much of it through starting small businesses, to the wider community. They create a warm sea of activity on which everybody floats upwards. According to official figures, an influx of immigrant workers to an area leads to an increase in non-immigrant wages and employment.

Ghost towns are not confined to Britain. In cities and villages across the US and continental Europe, the forces of economic globalisation are hollowing out communities. These are not the intended effects of economic policy, but they are real consequences, and policy-makers have to learn how to deal with them. The challenge is to make a world fit for Josephine to work in.

Ghost Town Britain II: death on the high street, by Julian Oram, Andrew Simms and Molly Conisbee, is published by the New Economics Foundation on 15 December